Nowadays, AI is the buzzword in industries, this goes the same for marketing. In the era of big data where consumers are flooded with information, businesses must go beyond standard marketing to effectively engage with their consumers to stay competitive. Personalization is a powerful differentiator in marketing that sets firms apart from their competitors. In fact, consumers not only prefer personalization—they now demand it as a standard.
According to McKinsey (Arora et al, 2021), 71% of consumers expect companies to offer personalized interactions. However, to achieve personalization marketing at an extensive scale, efficiently analyzing a large amount of data is fundamental to creating content and recommendations according to individual preferences and behaviors (Junaid, 2024).
This has become feasible with AI after the rapid expansion of accessible data and advancements in high-speed computing. Personalization marketing powered by artificial intelligence (AI) is a game changer that allows companies to deliver hyper-personalized content in real-time and on a large scale.
What is AI-driven Personalization Marketing
AI personalization involves using artificial intelligence to analyze data and learn user behavior to offer highly personalized marketing communication and services that will enhance customer experience and increase customer engagement (Hayes et al., 2024). From the consumer’s perspective, personalization means feeling valued, when the company demonstrates investment in the client-customer relationship (Arora et al, 2021). Therefore, AI fullfill consumer demand by delivering personalized experiences and proactive support, which fosters trust and long-term loyalty.
Why Adopt AI-Powered Personalization Marketing
McKinsey’s research found that companies that excel in personalization are generating 40% more revenue in comparison to those who are lacking in this. Moreover, 76% of consumers state that personalization represents a key factor in their decision-making of purchasing. Personalization is also key for maintaining customer relationships, leading to loyalty, long-term value, and repeat engagement.
Practical Applications of AI in Personalization Marketing
First, AI can offer personalized marketing recommendations by analyzing user data, such as browsing history, purchase patterns, and preferences. This approach of personalization marketing is commonly used in e-commerce like Amazon and Alibaba, as well as streaming platforms like Netflix and YouTube, to show the most relevant content to the user improving customer experience, generating interest, and boosting sales or subscriptions.
Second, AI can enhance targeted advertising by creating ads for a particular individual. The effectiveness of AI personalization marketing campaigns can reduce marketing costs by reaching the targeted individual with the correct message (Hayes et al, 2024).
Third, with AI email marketing campaigns will become even more segmented and personalized; thus, making them more effective. AI can further break down clients into smaller groups based on interests, shopping habits, position in the customer journey, previous interactions, historical orders, and much more.
Privacy Concerns in Personalization Marketing
Despite the preference of consumers towards personalization, they are also increasingly concerned about data privacy when dealing with AI. Therefore, companies must be transparent in how the data of consumers are collected and used to keep trust and foster a long-term relationship.
To conclude, AI-powered personalization completely transforms the digital marketing landscape, enabling companies to reach and engage more customers with personalized content and services at unprecedented scale and speed. This powerful tool powered by AI will not only drive revenue but also improve the customer experience, making it an essential tool for businesses in the digital marketing age.
References
Arora, & Ensslen. (2021, November 12). The value of getting personalization right-or wrong-is multiplying. McKinsey & Company. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying
Junaid, S. (2024). The Future Of Digital Marketing In 2024: Key Trends Shaping The Industry. The University of Winnipeg. https://pace.uwinnipegcourses.ca/blog/future-digital-marketing-2024-key-trends-shaping-industry
Hayes, M., & Downie, A. (2024, September 12). Ai personalization. IBM. https://www.ibm.com/think/topics/ai-personalization
How personalization is shaping the future of digital marketing. Minutehack. (2024, October). https://minutehack.com/news/how-personalization-is-shaping-the-future-of-digital-marketing
Carina Marculescu
Such an interesting article! If you want to find out more about the topic of personalization you should definitely check out my article: https://digital.hec.ca/en/blog/personalization-digital-marketing/